What’s Trending in Health Care? Conservative Ideas

This was published as a Wall Street Journal Think Tank column on July 14, 2014.

Conservative criticism of the Affordable Care Act has created the impression that liberal, “big government” ideas are driving the health-care system. But plenty of ideas that conservatives like are taking hold in health care as well. To wit:

*The number of Medicare beneficiaries in private Medicare Advantage plans reached nearly 16 million this year, a record, and the Congressional Budget Office projects that it will hit 22 million by 2020. This partial privatization of Medicare is happening despite concerns that reductions in payments to private plans (what some call over-payments) would curtail enrollment.

*More than half of people on Medicaid are enrolled in managed-care plans, which are typically run by private insurers that contract with states on a capitated, or risk, basis. More than 30 million low-income Medicaid beneficiaries are in private plans. The number is growing as states move sicker and disabled populations covered by both Medicaid and Medicare to managed care and as many states expand their Medicaid programs under the ACA, putting newly covered beneficiaries into managed care.

About 50 million Americans covered by Medicare and Medicaid at some point in the year are in private insurance arrangements. Now, this is not the block grant of Medicaid or voucherization of Medicare that some conservatives ultimately seek–just as the ACA is not the single-payer system that some liberals want–but it’s a substantial privatization, and one that has occurred largely incrementally and under the radar.

*The big underlying change unfolding in private health insurance is the trend toward higher deductibles and more “skin in the game,” a proposition that conservatives have always favored. In 2013, the average annual deductible in employer plans with a deductible was $1,135, but the steady growth in deductibles can best be seen among employers with fewer than 200 employees, where it reached $1,715 last year. In high-deductible plans with health savings accounts the deductible tops $2,000.

In a little-discussed irony, the ACA promotes the higher-deductible insurance plans that conservatives like: The average deductible for a “silver” policy in the federal health insurance marketplace is $2,269 for single coverage that has a combined deductible for medical services and prescription drugs.

The moral of this story? Attention is focused on Obamacare, but, like our political system generally, it is hard to move the health system dramatically left or right. And if you cut through the political debate, there are ideas at play in the health system that liberals, moderates and conservatives should each like.